Meet Enoch Root
If I can pass out one piece of free advice today, then it's "Make Enoch Root a favorite." That's particularly true if you want to use CAPS to find superior investment ideas and, in the end, make money.
I recently had the opportunity to chat with Mr. Root, aka Alex. Here are some excerpts… (Please note that all related links are at the bottom of this post.)
Mmbop: What's your name and background (investment or otherwise)?
Root: My name is Alex, EnochRoot on the boards (a character that appears throughout a number of Neal Stephenson books). I am an equity research analyst at a smallish investment advisor in the northeast US.
[Mmbop note: Apparently, the literary Enoch Root was a wizard who had the power to resurrect himself. After taking a look at Alex's portfolio, I'd suggest he chose the name because he loves looking for fallen stocks on the verge of resurrection.]
Mmbop: How would you classify yourself as an investor, and how did you come around to that investment strategy?
Root: My investment education was largely influenced by The Motley Fool from a very early stage. In high school I came upon the Fool's AOL site, and my first investments were made using the Foolish Four strategy. In college I actually had the chance to meet the Fools in person and even interned for a very short time at their (then) tiny headquarters in Alexandria (I can attest to the foosball table's presence even at that very early stage in TMF's existence). Primarily through the Fool's Berkshire Hathaway discussion board, I discovered the sensibility of Ben Graham and Warren Buffett's margin of safety approach to investing. That, and working through to the Chartered Financial Analyst designation, are probably the two factors most heavily influencing my investment philosophy. Ultimately, I guess I would classify myself as a fundamental research-oriented value investor who knows enough about modern portfolio theory to disregard it!
Mmbop: Do you use CAPS at all as a research tool?
Root: I mainly use CAPS as a way to track my results implementing the more "hairy" approach to investing that I am really attracted to, but that isn't entirely useful in my role at work (the "blood in the street" type investments that comprise much of my CAPS picks don't fit as well into my firm's more quality-focused investment approach).
Beyond that, I will regularly check a potential investment's CAPS page for any background commentary and to get a sense for how "known"
the pick is in the CAPS community. Honestly, it's a little bit of a contrary indicator for me, in that (Fool newsletter picks aside) I equate more players in the name as a momentum indicator (a negative for me), while few players in the name suggests to me the story is unknown and thus perhaps not priced into the stock. Lastly, when I happen across someone on the Fool discussion boards who seems to make a lot of sense, I will often peruse that player's CAPS picks for other potentially interesting ideas.
Mmbop: So what other CAPS players do you follow?
Root: Some of my favorites include BBQPorkMogul (now TMFBBQPork; hey CAPS techies, why doesn't this update automatically?!)), mrchw, RedneckRoleModel, wabuffo100, and of course "The Mann".
[Mmbop note: "The Mann" would be the Fool's Bill Mann, aka TMF Otter, who is a pretty smart investor -- even though he loves Duke.]
Mmbop: What's your best CAPS pick right now?
Root: If by best you mean favorite at current prices, I would have to say my short of WisdomTree Investments (OTC: WSDT.PK). My CAPS pitch on this one is fairly thorough so I'd suggest looking there, but in short this is a fast growing asset manager whose market value bears no resemblance whatsoever to its earnings power even if the company is subjected to the most outlandish growth and profitability assumptions I can come up with. Unfortunately this isn't a stock that one can readily short in the real world due to its lack of availability to borrow. The chief risk to the pick in my mind is the classic "market stays irrational longer than you stay solvent" danger. This is after all a real business that is growing and will continue to grow rapidly, and I suppose could actually exceed everyone's wildest expectations and grow into its current valuation. But that's a long long (long long
long) way off, and exceedingly unlikely in my opinion.
Mmbop: Your biggest loser to date has been Mobility Electronics (Nasdaq: MOBE). What's gone awry there, and do you still like your pick?
Root: I wrote about MOBE on the Falling Knives board after its big crack, you can read it here. In short MOBE has perennially failed to live up to its potential. In this particular instance the company hit its shareholders with a double whammy, announcing the loss of a significant client and the loss of a significant potential future client. At the time of that announcement the stock was for all intents and purposes abandoned by the market, and in my opinion was a good time to start a position, but reflecting on the current price, particularly given continued lack of traction for the company's products, I would not be particularly excited about a new investment either long or short here.
Mmbop: Any trash you'd like to talk to Bill Mann or anyone else?
Root: Well unfortunately I've crashed back down from 11th place to below 100th place, while "He Who Might Crush You With His Heft" remains seemingly permanently ensconced in the top 20. So I'm in no position to trash talk... right now anyway. Oh, you can tell TMFBBQPork that I think he's a punk with a "Stocks I Own" list so long it makes one wonder if he's compensating for something... And of course, to TMFBent... YER JEST SHORT!!!!!!!!
Enoch Root's CAPS page: http://caps....059470229383
Berkshire Hathaway Discussion Board: http://board...p;bid=101158
BBQPorkMogul CAPS page: http://caps....267375600830
mrchw CAPS page: http://caps....131903974293
RedneckRoleModel CAPS page: http://caps....044082545170
wabuffo100 CAPS page: http://caps....387760997846
TMF Otter CAPS page: http://caps....000000024659
WSDT.PK CAPS page: http://caps.fool.com/Ticker.aspx?ticker=WSDT.PK
More information on MOBE: http://boards.fool.com/Message.asp?mid=24671997
TMF Bent CAPS page: http://caps....000103882559